Judge: Joel L. Lofton, Case: 22AHCV00501, Date: 2023-03-28 Tentative Ruling

Case Number: 22AHCV00501    Hearing Date: March 28, 2023    Dept: X

   Tentative Ruling

Judge Joel L. Lofton, Department X

HEARING DATE:     March 28, 2023                                   TRIAL DATE: November 28, 2023

CASE:                         MARIA ANTONIO CERON, v. NISSAN NORTH AMERICA, INC., a Delaware Corporation; TROPHY UNIVERSAL CITY GROUP LLC, a California Limited Liability Company dba Universal City Nissan, and DOES 1 through 10, inclusive.

CASE NO.:                 22AHCV00501

MOTION TO COMPEL ARBITRATION  

MOVING PARTY:               Defendants Nissan North America, Inc. and Trophy Universal City Group LLC (“Defendants”)

RESPONDING PARTY:      Plaintiff Maria Antonio Ceron

SERVICE:                              Filed January 24, 2023

OPPOSITION:                       Filed March 15, 2023

REPLY:                                   Filed March 21, 2023

RELIEF REQUESTED

            Defendants move to compel Plaintiff to submit her claim to binding arbitration.

BACKGROUND

             This case arises from Plaintiff Maria Antonio Ceron’s (“Plaintiff”) lemon law claim for a new 2018 Nissan Sentra VIN 3N1AB7AP8JY235565 (“Subject Vehicle”). Plaintiff filed a complaint on July 25, 2022, alleging four causes of action for (1) violation of Song-Beverly Act – Breach of Express Warranty, (2) fraudulent inducement – intentional misrepresentation, (3) fraudulent inducement concealments, and (4) negligent repair.

TENTATIVE RULING

            Defendants’ motion to compel arbitration is granted.

            Defendant’s request to stay the proceedings pursuant to Code of Civil Procedure section 1281.4 is granted.

OBJECTION TO EVIDENCE

            Plaintiff’s objections are overruled.

            Defendant’s objection to the declaration of Jefferey Mukai paragraph 5, exhibits 1A-1E is sustained.

REQUEST FOR JUDICIAL NOTICE

            Defendant’s requests for judicial notice for Exhibits 1 through 4 is granted pursuant to Evidence Code section 452, subdivision (d).

LEGAL STANDARD

“California and federal law both favor enforcement of valid arbitration agreements.” (Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 889.) “A party who files a motion to compel arbitration ‘bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.’’ (Cisnero Alverez v. Altamed Health Services Corporation (2021) 60 Cal.App.5th 572, 580.)

DISCUSSION

Petition to Compel Arbitration

            The arbitration clause at issue provides:

Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute) between you and us or our employees, agents, successors, or assigns, which arises out of or relates to you credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral binding arbitration and not by a court action.

(Salas ¶ 8, Exhibit 5 at p. 2.)

The Doctrine of Equitable Estoppel

            The next issue is whether Defendants can enforce the arbitration provision based on the doctrine of equitable estoppel.

            “As a general rule, only a party to an arbitration agreement may enforce the agreement.” (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 495 (“Felisilda”.) However, “a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1237.) “By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement.” (Boucher v. Alliance Title Co., Inc (2005) 127 Cal.App.4th 262, 272.)

Whether Plaintiff’s Claims are Intimately Founded in and Intertwined with the Agreement

            Plaintiff argues that her claims are not based on or intertwined with the Agreement because her claims are based on Nissan’s written warranties rather than the sales contract. Plaintiff also argues that the doctrine of equitable estoppel is inapplicable here and that the ruling in Felisilda is inapplicable based on distinguishable facts.

            In Felisilda, supra, 53 Cal.App.5th at p. 490, the court’s analysis of whether the plaintiff’s claims were intertwined with the sales agreement began with an evaluation of the language of the arbitration clause at issue. The arbitration clause in Felisilda encompassed “[a]ny claim or dispute . . . which arises out of or relates to . . . condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract . . ..” (Id. at p. 490.) The Court held that because the plaintiffs “expressly agreed to arbitrate claims arising out of the condition of the vehicle – even against third party nonsignatories to the sales contract – they are estopped from refusing to arbitrate their claim against [the defendant].” (Id. at p. 497.)

            The reasoning from Felisilda supports the conclusion that where a plaintiff agrees to arbitrate claims relating to the purchased vehicle’s condition and involving third parties, a claim for a defect in the vehicle’s condition is intertwined with the sales contract.

            Here, Plaintiff agreed to arbitrate claims “which arises out of or relates to you credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) . . ..” (Salas ¶ 8, Exhibit 5 at p. 2.)

            Further, Plaintiff’s claims are all predicated on the condition of the Subject Vehicle. Plaintiff’s first cause of action alleges that the Subject Vehicle suffered from defects that Defendants were unable to remedy in conformity with the applicable express warranty. (Complaint ¶¶  84-87.) Plaintiff’s second cause of action alleges that Defendants were aware of the CVT defect presented in the Subject Vehicle but made false statements relating to the Subject Vehicle’s condition. (Id. ¶¶ 95-111.) Plaintiff’s third cause of action alleges that Defendants concealed the existence of the defect. (Id. ¶ 118.) Lastly, Plaintiff’s fourth cause of action alleges that Defendants failed to properly repair the Subject Vehicle. (Id. ¶ 133.)

            In opposition, Plaintiff relies in part on Ngo v. BMW of North America, supra, 23 F.4th 942, in support of her position that Felisilda is not applicable in the present case. In Ngo, the Ninth Circuit briefly distinguished Felisilda, stating that the key distinction was that the plaintiffs initially sued both the dealership and the manufacturer, after which the dealership moved to compel arbitration. (Id. at p. 950.) The court emphasized that a signatory had moved to compel arbitration and the signatory was only dismissed after arbitration was compelled. (Ibid.)

However, Plaintiff’s reliance on Ngo is insufficient to distinguish Felisilda from the present case. In Felisilda, supra, 52 Cal.App.5th at p. 495, the court framed the relevant question as “whether a nonsignatory to the agreement has a right to compel arbitration under that agreement.” In Felisilda, the operative issue was not who was named a party to the case, but rather the nature of the claims encompassed within the arbitration clause. (Id. at p. 497.) Tellingly, the Felisilda Court distinguished the arbitration clause at issue from other federal cases because in the other cases “the arbitration provision lacked the key language present in this case, namely an express extension of arbitration to claims involving third parties that relate to the vehicle's condition.” (Id. at p. 498, emphasis added.)

Additionally, other published California cases support the conclusion that a claim for a defect in the vehicle’s condition may be intertwined with the sales contract. In Pacific Fertility Cases (2022) 301 Cal.Rptr.3d 611, 614, plaintiffs had filed suit against the manufacturer and seller of a cryogenic storage tank. The contract that contained an arbitration provision was between the plaintiffs and a defendant that provided fertility-related services that had purchased and used the cryogenic tank. (Ibid.) The court discussed a federal case Mance v. Mercedes-Benz USA (N.D.Cal. 2012) 901 F.Supp2d 1147, 1157, where the District Court held that a claim for breach of express written warranty arose out of the sales contract because the sales contract allowed the buyer to receive the warranty.

Some federal cases such as Ngo, supra, 23 F.4th 942, 949, have rejected the “but-for” reasoning. However, the court in Pacific Fertility Cases did not expressly disapprove of the reasoning in Mance. Rather, the court distinguished the facts of the cases before it and stated that the plaintiffs’ claims against the seller and manufacturer of the cryogenic tank were based on a defective tank, which did not arise out of the plaintiffs’ contract to pay for fertility-related services. Here, Plaintiff’s claims are not as easily extricated from the sales agreement containing the arbitration provision because the Agreement provided her with the Subject Vehicle and the warranties from Nissan.

Lastly, “the decisions of federal district and circuit courts, although entitled to great weight, are not binding on state courts even as to issues of federal law.” (Felisilda, supra, 53 Cal.App.5th 486, 497 (“Felisilda”.) Felisilda is binding on this court. The decision in Felisilda relied on the existence of language that extended arbitration to claims involving third parties that relate to the vehicle conditions. Similar language extending the arbitration of claims involved is present in the Agreement at issue here. Thus, the doctrine of equitable estoppel applies to allow Defendants to enforce the arbitration agreement was a nonsignatory.

Unconscionability

            Plaintiff argues that the arbitration agreement is unenforceable because it is unconscionable. Although Defendants argue that the agreement contains a delegation provision to allow the arbitrator to determine the scope of the provision, Plaintiff contends that the entire agreement, including the delegation provision, is unconscionable. Thus, the court reviews the merits of Plaintiff’s arguments.

“ ‘[U]nconscionability has both a “procedural” and a “substantive” element,’ the former focusing on ‘oppression’ or ‘surprise’ due to unequal bargaining power, the latter on “overly harsh” or “one-sided” results. [citation.] ‘The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.’ ” (Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 114.)

“Procedural unconscionability ‘addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power.’ ” (Carbajal v. CWPSC, Inc., supra, 245 Cal.App.4th at p. 243.) “ ‘It is well settled that adhesion contracts in the employment context, that is, those contracts offered to employees on a take-it-or-leave-it basis, typically contain some aspects of procedural unconscionability.’ ” (Id. at p. 243.) “When . . . there is no other indication of oppression or surprise, ‘the degree of procedural unconscionability of an adhesion agreement is low, and the agreement will be enforceable unless the degree of substantive unconscionability is high.’ ” (Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.)

Here, Plaintiff’s sole argument of procedural unconscionability was that the arbitration agreement was presented on a take-it-or-leave-it basis. Thus, Plaintiff has demonstrated a low degree of procedural unconscionability.

            “Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided.” (The McCaffrey Group, Inc. v. Superior Court (2014) 224 Cal.App.4th 1330, 1348.) “A contractual provision is not substantively unconscionable simply because it provides one side a greater benefit.” (Carbajal, supra, 245 Cal.App.4th at p. 248.)

Plaintiff argues that the agreement is substantively unconscionable because of language governing the determination of fees. Specifically Plaintiff argues two phrases are unconscionable: (1) “We will pay your filing, administration, service or case management fee and your arbitrator or hearing fee all up to a maximum of $5000, unless the law or the rules of the chosen arbitration organization require us to pay more” and (2) “Each party shall be responsible for its own attorney, expert, and other fees unless awarded by the arbitrator under applicable law.” (Salas ¶ 8, Exhibit 5 at p. 2.) However, in each instance, Plaintiff makes an argument that the provision is unconscionable but specifically does not reference the language which provides “unless” certain factors occur. Plaintiff’s selective arguments are rejected.

Plaintiff has failed to establish that the agreement is unconscionable.

            Stay of the Proceedings

            “If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc. section 1281.4, emphasis added.)

            Defendants’ request for a stay of the proceedings is granted.

CONCLUSION

            Defendants’ motion to compel arbitration is granted.

            Defendant’s request to stay the proceedings pursuant to Code of Civil Procedure section 1281.4 is granted.

            Final Status Conference date is vacated and Jury Trial date is converted into a status hearing re: Arbitration.

            Moving Party to give notice.

Dated:   March 28, 2023                                 ___________________________________

                                                                                    Joel L. Lofton

                                                                                    Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court indicating their

intention to submit.  Parties intending to appear are strongly encouraged to appear remotely.  alhdeptx@lacourt.org